Prevailing inflation not enough basis to suspend TRAIN law

MANILA — The prevailing high inflation rate is not yet enough to warrant the immediate suspension of the implementation of Tax Reform for Acceleration and Inclusion (TRAIN) law, Senator Sherwin Gatchalian said Wednesday amid clamor to suspend the newly-implemented law following reports that inflation reached a five-year high at 4.5 percent in April 2018.

April’s inflation rate is much higher than the government’s inflation target range of 2 percent to 4 percent for the whole year

In an interview at the Senate, Gatchalian said despite the clamor, it would take at least three more months to determine a more accurate assessment of the inflation rate and decide on possible recommendations.

“In my opinion, we need one more quarter to make a decision. Second quarter pa lang tayo ngayon. Para magkaroon tayo ng accurate reading, dapat may isang quarter pa (We’re still in the second quarter. We need another quarter to have a more accurate reading),” he said after a hearing of the Senate Committee on Economic Affairs, which he chairs, on the inflationary effects of the law.

The joint hearing with the Senate Committee on Ways and Means tackled the inflationary effects of TRAIN 1 and probe into the available remedies that can dampen inflationary pressure.

The hearing was also aimed at pushing for a faster, sufficient, and more effective implementation of the social mitigating measures under the said law.

“Ang importante naman dito, na ang inflation at ang pagtaas ng presyo ay hindi tumuloy-tuloy. So gumagawa tayo ng mga hakbang, at isa dito ay ang posibilidad na i-suspend ang excise tax or dagdagan ang cash transfer na ibibigay. Yun ang mga pinag-aaralan natin ngayon (What is important here is that inflation and price hikes won’t continue. That’s why we are taking steps and one of them is the possibility of suspending the excise tax or provide a bigger cash transfer. That is what we are studying now. But we will have an accurate reading by the end of third quarter,” Gatchalian said.

Gatchalian’s statements supported those of Budget Secretary Benjamin Diokno who earlier pointed out that an increase in prices is only a temporary effect of the law and is not expected to linger.

“To us, our concern is to create more jobs — more quality jobs — and of course, minimize inflation. This increase in prices is transitory. We expect this to normalize during the second half of the year or in 2019,” Diokno said during a breakfast forum Wednesday.

Nevertheless, Gatchalian said that if the inflation rate still hovers above 4 percent after the third quarter, the decision to suspend the TRAIN law could be made.

He said the three-month period would give lawmakers enough time to come out with a special law should they decide to recommend to suspend its implementation.

“That would still give us enough time — three months — to suspend if we need to suspend it. If we will recommend to suspend it, then we will need a special law. That’s also another reason kung bakit nag-hearing na tayo ngayon para if ever na kailangan natin ng batas, mayroon pa tayong panahon para gumawa ng batas (That another reason why we are having these hearing for us to determine if we need a law and if we still have time to pass one,” Gatchalian said.

But not all parts of the law would be suspended if ever the decision is reached but only those dealing with excise taxes on fuel, he said.

“Yan ang pinakamalaki, on all petroleum products including diesel and gasoline, and maybe coal dahil ang coal ay nasa kuryente yan. So all excise taxes can be suspended,” he said.

He added that they are also looking at the possibility of increasing the cash assistance to poor Filipinos — especially the bottom 30 percent.

Under the TRAIN law, PHP200 will be disbursed per month to 10 million poor households as part of the mitigating measures in the law.

“I’m thinking of adjusting it from PHP200 to about PHP450. If you look at the poorest 30 percent of our population, ang pinakamalaking consumption nila doon is food. That’s almost 70 percent of their consumption,” Gatchalian said.

The lawmaker warned though that any proposal to amend parts of the TRAIN law will need comprehensive review so as to avert confusion among taxpayers, especially since the Bureau of Internal Revenue (BIR) has already came out with the implementing rules and regulations (IRR) for the tax reform package.

“We have to study that, but yan ay magiging komplikado dahil lumabas na ang IRR ng BIR. So may mga ganitong complications. So if you will notice, ang tax reform ay kabit-kabit yan, maraming complication, kapag ginalaw mo ang isang component, gagalaw ang lahat. So dapat pag-aralang mabuti para hindi naman maging magulo sa ating mga taxpayers,” he said. (Jose Cielito Reganit/PNA)

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